https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9148

**THE REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **CIVIL SUIT NO. E1323 OF 2025** **-BETWEEN-** **DAMERA ENTERPRISES LIMITED....................... APPLICANT** **-VERSUS-** **KAMAU THUO & WANGARI THUO.…………………DEFENDANT** **RULING** 1. Before this Court for determination are two applications. The first is the Notice of Motion dated 23rd December, 2025, filed by Damera Enterprises Limited (the Applicant). The second is the Chamber Summons dated 22nd January, 2026, filed by Kamau Thuo & Wangui Thuo (the Respondents). The genesis of the dispute between the parties is a Lease Agreement over L.R No. 330/885 (now Nairobi/Block 15/520, entered into on 4th February, 2022, under which the Applicant was the lessee and the Respondents the lessors. The lease agreement provided for the resolution of any dispute between the parties by way of arbitration under the Arbitration Act, 1995. A dispute subsequently arose and was referred to arbitration before a sole arbitrator. Upon hearing the parties, the arbitrator delivered a final award on 17th December, 2025, in favour of the Respondents. The Award gave the Respondents possession of the suit property and issued eviction orders against the Applicant. 2. Thereafter, the Applicant filed its application seeking, *inter alia*, to set aside the arbitral award and all consequential orders; to have the matter reinstated for hearing and determination; to stay execution of the Arbitral Award pending the hearing and determination of the application; and for costs. On the other hand, the Respondents filed an application seeking the recognition and adoption of the final arbitral award as a decree of this Court; issuance of a decree in terms of the award; leave to execute the decree before taxation of costs; and costs. 3. In support of its application to setting aside the award, and in opposition to the Respondent’s application for adoption and execution, the Applicant relies on the grounds set out on the face of the application, the supporting affidavit sworn by Sengal Letebreham Kahsai on 23rd December, 2025, the replying affidavit sworn on 17th March, 2026, and the submissions dated 17th March, 2026. The Applicant contends that the arbitrator exceeded her jurisdiction by purporting to terminate the tenancy and order vacant possession, reliefs which, it argues, fall within the exclusive jurisdiction of the Environment and Land Court or the Business Premises Tribunal. Additionally, the Applicant asserts that the suit premises constitute a controlled tenancy under the Landlord, Tenants Shops, Hotels and Catering Establishment Act, Cap 301, and only the Business Premises Rent Tribunal has jurisdiction to order eviction. Consequently, the Applicant argues that the orders for vacant possession and eviction was ultra vires, and against public policy. 4. The Applicant further contends that the award dealt with matters not contemplated by or falling within, the terms of the reference to arbitration. In particular, it urges that the issues submitted to arbitration concern rent arrears and renewal of the lease, and did not include termination of the tenancy or recovery of vacant possession. It therefore maintains that the award made falls outside the scope of arbitration. The Applicant also submits that the arbitrator conducted the proceedings in a manner that denied it a fair opportunity to present its case, contrary to Section 35(2)(a)(iii) of the Arbitration Act. In support of this claim, it asserts that the Respondent unilaterally appointed the sole arbitrator, and it was neither notified nor invited to participate in the proceedings, thereby depriving it of the opportunity to be heard and violating the rules of natural justice. 5. Moreover, the Applicant challenges the Respondent’s claim for *mense profit* as far-fetched and unfounded, particularly in the absence of any proven breach of the contract. It further avers that, and admits that if there were any arrears, the same had been settled at the time of the arbitration proceedings. It also alleges that the award was rendered under the influence of the Respondent. For these reasons, it submits that the entire arbitration proceedings were null, void and that the award cannot stand. 6. The Respondent, on the other hand, rely on the grounds set out on the face of their application, the supporting affidavit sworn by Kamau Thuo on 21st January, 2026, the replying affidavit sworn on 9th March, 2026, and submissions of even date in support of their application for adoption and execution of the award and in opposition to the Applicant’s application for setting aside. They contend that the lease agreement provided for the referral of any dispute between the parties to arbitration, without any limitation or restrictions. 7. The Respondents submit that the Applicant was in rent arrears and sublet the suit premises contrary to the lease agreement, thereby necessitating the issuance of a termination notice in line with the lease agreement. They further contend that the Applicant’s failure to settle the rent arrears or vacate the suit premises gave rise to a dispute. It is their case that the issues referred to arbitration were those contemplated by the parties for resolution through arbitration. They also maintain that the sole arbitrator was independently appointed by the Chairman of CIArb (Kenya), in accordance with Clause 3 (f) of the lease agreement (the arbitration clause). According to the Respondents, this appointment was necessitated by the Applicant's refusal or failure to participate in the appointment of the arbitrator. 8. The Respondents further assert that, following the appointment, the parties attended a preliminary meeting, at which they accepted the appointment and agreed on the procedure to be followed in the conduct of the proceedings. For these reasons, the Respondents urge that the Applicant had proper notice of and voluntarily participated in the proceedings. It is therefore their position that, upon appointment, the arbitrator had full authority to determine all issues referred to her, including the grant of remedies ordinarily grantable by a court, such as declarations, orders for possession and eviction, award of *mense profit*, costs and interest. 9. The Respondents further submit that an application under Section 35 of the Arbitration Act does not constitute an appeal. They argue that the grounds advanced by the Applicant, *to wit*, whether there was a breach, rent arrears, and whether *mense* *profit* was payable, have been heard and determined conclusively and are not grounds for setting aside the award. Consequently, they maintain that the resultant arbitral award is final and binding pursuant to Section 32A of the Arbitration Act and that it conclusively resolves the dispute submitted, subject only to the limited ground set out under Section 35 of the said Act. In their view, the Applicant has raised unsubstantiated allegations and has failed to satisfy the threshold for setting aside or the burden of proof under Sections 35(2)(a) and 37(1)(a) of the Arbitration Act. **Analysis** 1. Upon careful consideration of the pleadings, evidence, and written submissions filed in this matter, two issues crystallise for determination; whether the Applicant has satisfied the grounds for setting aside the arbitral award, and whether the Respondents have met the threshold for adoption of the award. For good order, I shall first determine the application for setting aside the award. 2. Before delving into the substantive issues, it is imperative to restate the law governing the role of courts in arbitration. It is now a well settled principle, both locally and internationally, that the court’s role in arbitration is strictly limited to a basic minimum. This principle, which underpins the doctrine of finality of arbitral award, is intended to promote the expeditious and efficient settlement of disputes. The Kenyan position on the role of the court in arbitration is stated in Section 10 of the Arbitration Act, which is in *pari materia* with Article 5 of the Model Law, to the effect that: ***Except as provided in this Act, no court shall intervene in matters governed by this Act.*** 1. The parameters for setting aside an arbitral award are also well enunciated in law. Pursuant to Section 35 of the Arbitration Act, the law exhaustively sets out the limited grounds upon which an arbitral award may be impugned. It provides that that recourse to the High Court may only be made by way of an application for setting aside under subsections (2) and (3), and only where the Applicant furnishes strict proof of the grounds enumerated therein. These include, inter alia, incapacity of a party, invalidity of the arbitration agreement, lack of proper notice or inability to present one’s case, excess of jurisdiction, improper composition of the tribunal, fraud or undue influence, non-arbitrability of the subject matter, or conflict with public policy. 2. Equally, the framework for recognition, enforcement and adoption of arbitral awards is provided under Section 36 and read with Section 37 of the Arbitration Act, which mirrors the provisions of Section 35 set out above. 3. Turning now to the merits of the application for setting aside, that is whether the Applicant has satisfied the parameters for setting aside. The Applicant raises several grounds which, in essence, fall within three broad sub-issues: whether the arbitrator acted without jurisdiction; whether the arbitrator determined issues outside the scope of the reference; and whether the award is contrary to public policy. 4. On the question of jurisdiction, the Applicant contends that the appointment of the arbitrator was contrary to the agreed procedure set out in the arbitration agreement/clause. It argues that the Respondents unilaterally appointed the arbitrator without its involvement or concurrence. 5. The Respondents, however, assert that following the Applicant’s continued breach of the lease agreement, they declared a dispute and by a notice dated 24th March, 2025, invited the Applicant to concur in the appointment of a sole arbitrator. This notice, they state, was duly served on the Applicant’s Advocates on record and the Applicant’s Director through their respective emails. They further contend that the Applicant failed or neglected to respond to the invitation, thereby necessitating the appointment of the arbitrator, by the Chairman of CIArb (Kenya), in accordance with Clause 3 (f) of the lease agreement. 6. It is trite law that an arbitration clause constitutes a self-contained agreement, distinct from the substantive contract, through which parties agree to submit their disputes to arbitration. It is the foundation upon which arbitral jurisdiction is anchored. The law accords parties wide autonomy to determine, inter alia, the procedure for the appointment of an arbitral tribunal. 7. In the present case, the arbitration clause is contained in Clause 3(f) of the Lease Agreement dated 4th February, 2022, which provides as follows: ***“Save as may be hereinbefore otherwise be specifically provided all questions hereafter in dispute between the parties hereto related to or arising out of this Lease and all claims for compensation or otherwise not mutually settled and agreed between the parties hereto shall be referred to arbitration by a single arbitrator to be agreed by the parties within 21 days of declaration of a dispute by either of them, and in default of agreement to be appointed by the Chairman for the time being of the Chartered Institute of Arbitrator (Kenya Branch) on the application of either party. The arbitration shall be conducted under the Arbitration Act 1995 as amended from time to time and/or such other Act or Acts for time being in force in Kenya in relation to Arbitration.”*** 1. The arbitration clause before me is explicit and leaves no ambiguity as to the procedure for the appointment of an arbitrator. The critical question therefore is whether the procedure was followed? From the material on record, it is evident that the Respondents issued a notice of dispute and invited the Applicant to concur in the appointment of a sole arbitrator through its advocates and one of the directors. This is demonstrated by the notice of dispute and invitation to concur in the appointment of 24th March, 2025, and the forwarding email sent on 25th March, 2025. This notice and invitation are in line with the first requirement under the arbitration clause on appointment set out in the preceding paragraph 17. In my view, this step fully complied with the initial requirement under the arbitration clause. 2. The Applicant did not respond to the said notice and invitation. Upon the expiry of the stipulated 21-day period without agreement, the Respondents invoked the default mechanism under the clause and applied to the Chairman of the Chartered Institute of Arbitrators (Kenya Branch) for the appointment of an arbitrator through their advocate’s letter dated 24th April, 2025. Consequently, by letter dated 13th May, 2025, the Chairman appointed Ms. Christine Mwikali Musau, MCIArb, as sole arbitrator. The arbitrator accepted the appointment and notified both parties of her appointment by her letter dated 12th May, 2025. 3. Guided by the express provisions of the arbitration clause and the uncontroverted evidence on record, I am satisfied that the procedure for the appointment of the arbitrator was strictly adhered to. The Respondents cannot be faulted for invoking the default appointment mechanism after the Applicant failed to participate in the process. Accordingly, I find that the appointment of the arbiter was proper, lawful, and in full conformity with the parties agreement and the principle of party autonomy. Further, the evidence demonstrates that notice of the appointment was duly communicated to the Applicant, who subsequently, participated in the arbitral proceedings to their conclusion. In the premises, the arbitrator was properly seized of jurisdiction and was competent to determine the dispute arising from the lease agreement within the agreed terms of reference. 4. On the question of whether the arbitrator determined issues outside the scope of the reference, the Applicant contends that the matters submitted to arbitration were limited to rent arrears and renewal of the lease, and did not extend to termination of the lease or the grant of vacant possession as determined by the arbitrator. The Respondents on the other hand, maintain that, as per the arbitration agreement, the parties agreed to refer all disputes between them, arising from the lease agreement, to arbitration without limitations or qualifications, and for these reasons, they argue that the arbitrator did not determine any issues outside the reference. 5. A plain reading to the arbitration clause, reveals that the parties agreed to refer all questions, and all claims for compensation or otherwise not mutually settled, to arbitration. The clause reads in part as follows; ***Save as may be hereinbefore otherwise be specifically provided all questions hereafter in*** ***dispute between the parties hereto*** ***related to or arising out of this Lease and all claims for compensation or otherwise not mutually settled and agreed between the parties hereto shall be referred to arbitration.*** 1. The wording of the clause is broad, clear, and unequivocal. It encompasses *any* dispute, question, or claim arising between the parties in relation to, or out of, the lease agreement. In the circumstance, I find that the arbitrator was not precluded from determining issues relating to the termination of the lease, vacant possession of the suit premises and eviction from the suit premises, or any other issues so long as the dispute was between the parties and relating to or arising out of the lease agreement. The matters determined by the arbitrator therefore fell squarely within the scope of the reference to arbitration. 2. On whether the award is contrary to public policy, the Applicant submits that the arbitrator exceeded her jurisdiction by purporting to terminate the tenancy and order vacant possession, which are reliefs reserved for the Environment and Land Court or the Business Premises Tribunal. It also argues that the lease agreement created a controlled tenancy under the Landlord, Tenants Shops, Hotels and Catering Establishment Act, Cap 301, and that only the Business Premises Rent Tribunal has jurisdiction to order eviction. For these reasons, the Applicant contends that the award is inconsistent public policy. 3. The Respondents, in response, reiterate that the Applicant was in rent arrears and had sublet the suit premises contrary to the lease agreement. They further assert that they lawfully terminated the lease agreement upon their issuance of the requisite termination notice, as provided by the lease agreement, but the Applicant had failed to vacate and hand back possession to the Respondents. 4. From the record, it is not in dispute that the lease agreement conferred upon the Respondents the right to terminate the lease in the event of breach of the lease agreement, upon issuance of the requisite notice. Clause 3(c) of the lease agreement provides; ***If the said or any part thereof shall be in arrears for the space of not less that Thirty (30) days next after any of the days whereon the same ought to be paid as aforesaid whether the same shall have been legally demanded or not or if there shall be any breach, non-performance or non-observance by the Lessee of any of the covenants and conditions hereinbefore contained and on his part to be performed and observed or if the Lessee shall enter into insolvency……… then in any such case it shall and may be lawful for the Lessor at any time thereafter to enter into and upon the demined premises or any part thereof …… have again repossess and enjoy as in its former estate….*** ***PROVIDED ALWAYS that in the event of any breach of the said covenants and conditions the Lessor shall not be entitled to exercise the said right of entry unless the Lessor shall first give the Lessee Thirty (30) days notice in writing of the breach complained of and the Lessee shall fail to remedy such breach before the expiry of such notice.*** 1. The evidence shows that the Respondents issued the 30-day notice of intention to terminate the lease on 22nd January, 2025, citing rent arrears and subletting the suit premises as the breaches requiring remedy. Upon the Applicant’s failure to remedy the breaches within the set period, the Respondents terminated the lease on 24th February, 2025. Despite the termination and request for vacant possession, the Applicant failed to hand over the premises, necessitating the invocation of the arbitration clause and the arbitration proceeding. 2. In the award, the arbitrator found that the Applicant was in breach of the lease agreement and had continued to occupy the suit premises without the consent of the lessor after the lease had been terminated. The arbitrator consequently held that the Applicant was in unlawfully occupation of the suit property and had refused to yield up possession, to the detriment of the Respondents. On that basis, the arbitrator awarded the Respondents *mesne profits*, ordered the Applicant to vacate and execute the handover possession of the premises to the Respondents, failure to which, eviction would issue. 3. In essence, the arbitrator did no more than enforce the contractual rights and obligations freely agreed upon by the parties in the lease agreement, particularly as is set out in Clause 3(c) above. In doing so, the arbitrator adhered to the fundamental principle of party autonomy, which lies at the heart of arbitration. The parties expressly agreed that, upon breach and failure to remedy the same within the stipulated notice period, the lessor would be entitled to terminate the lease and repossess the premises. Having voluntarily submitted all disputes arising from the lease to arbitration, and having defined the consequences of breach, the Applicant cannot now approbate and reprobate by contending that the remedies flowing from such breach were unavailable to the arbitrator. 4. I must however, clarify that, disputes involving determination of title to land or contested ownership are generally nor arbitrable and fall strictly within the jurisdiction of the Environment and Land Court. The present dispute, however, does not concern title or proprietorship. Rather, it concerns a landlord–tenant relationship, breach of contractual obligations, and the enforcement of agreed remedies. Such matters were properly within the scope of arbitration as agreed by the parties. 5. As to whether the lease agreement created a controlled tenancy within the exclusive jurisdiction of the Rent and Business Tribunal, I am guided by the provisions of Section 2 of the Landlord and Tenant (Shops, Hotels and Catering Establishments), Cap 301, to the effect that ***a controlled tenancy is a tenancy of a shop, hotel or catering establishment that is either not reduced in writing, or if it is in writing, is for a period not exceeding five years, contains provision for termination otherwise than for breach of the tenancy agreement, within five years or which relates to premises of a class specified by the cabinet secretary***. 6. In the present case, the lease agreement between the parties was for a period of six (6) years commencing on 15th December, 2021. It therefore falls outside the statutory definition of a controlled tenancy. Accordingly, the Applicant’s contention that the tenancy falls within the jurisdiction of the Business Premises Rent Tribunal is legally untenable and must fail. 7. With regard to the allegations that the arbitrator denied the Applicant the right to be heard or acted in favour of the Respondents, I find no credible evidence has been placed before this Court to substantiate claims of bias procedural unfairness, or denial of a fair hearing. Similarly, the challenge to the ward of *mense* *profits* amounts, in substance, to an appeal on the merits of the arbitral decision, which is permissible under Section 35 of the Arbitration Act. These grounds are therefore without merit. 8. In the result, I find that the Applicant has failed to establish any of the grounds set out under Section 35 of the Arbitration Act for setting aside the arbitral award. 9. On the issue of recognition and enforcement of the award, having found that the Applicant’s application for setting aside is devoid merit and liable to dismissal, it follows that the Respondents’ application for recognition and enforcement is merited. Accordingly, in exercise of this court’s jurisdiction under Section 36 as read with Section 37 of the Arbitration Act, I allow the Respondents’ application. 10. The upshot of the above is that, the Notice of Motion dated 23rd December, 2025, is hereby dismissed; the Chamber Summons application dated 22nd January, 2026, is hereby allowed; and the Respondents are awarded the costs of both applications. 11. It is so ordered. ***Delivered, Dated and Signed virtually this 25th day of June, 2026*** **RHODA RUTTO** **JUDGE** **In the presence of;** **Court Assistant: Wabwire** **Mr. Githara for the Respondent** **Mr. Kwaro for the Applicant**